Shelf Companies & Shelf Corporations
Not to be confused with a shell company or shell corporation, a shelf company or shelf corporation is a
company that has been formed and put on the shelf to age, having no business activity. It is then typically sold to an individual
or group who are seeking to jump-start a new company by avoiding some of the procedures normally required of startups. A shelf
corporation or shelf company (aka an aged corporation) can be used for a number of purposes including saving time in the creation
of a new corporation or to gain access to capital or credit.
There are numerous advantages in using shelf companies. In the past it took months to incorporate a new company but now it is comparatively easy in the US,
Canada, Western Europe and Australia. In some instances it may only take a few hours. However this can be a double edged sword; it gives a company an increased historic
timeline which can inspire confidence in potential investors or customers. However, if the prior corporation was put on the shelf due to a poor business history then
it may have a negative impact on the new business inhabiting the shelf company as well. That is why investigation and due diligence prior to purchasing or buying a shelf
company is very important in this matter.
A somewhat specialized aspect of a shelf corporation is utilized when a company is seeking to bid on a contract. Due to the fact that some government
entities as well as private enterprises have a prerequisite requiring the bidding company to be in business a certain length of time in order to even place a contract bid.
In this scenario a new company would miss out on this opportunity whereas a shelf corporation can show longevity of a company filing and put them in the game.
You may have seen listings online for "shelf corporations for sale", what are they selling? A shelf corporation for sale is just that, a pre-existing company that
ideally has no previous activity and is ready to use. You may also have seen listings for "shelf corporations Australia" or "shelf company Malaysia" and wondered what is this
about? In Australia the corporation tag of "Pty Ltd" adds a certain cache but international shelf corporations come with international laws and regulations as well. For instance,
in Malaysia it is required to have two local directors, the business transaction cannot be executed overseas and may require multiple visits. These factors can negate any
time or financial savings normally associated with shelf corporations. Now in overseas jurisdictions they also have a Public Limited Company which is materially different
from shelf corporations.
As with any business strategy, utilizing a shelf company or shelf corporation has both advantages and disadvantages. For instance, a shelf corporation is always classified as a
C-Corp at the time of sale but depending on a company's tax situation they may elect to file an IRS Form 2553 and transform to an S-Corp. Each company must weigh the pros and
cons in relation to their business objectives and determine the best course of action for them. But there is no denying that shelf corporations aka shelf companies
have helped many a company jump-start their business and achieve their financial goals in an accelerated time frame.
Shelf Company Shelf Corporations News & Blog
Bos Shelf Company Partners With BP
September 25, 2012
The Bos Shelf Company has entered into an arrangement
as contractor for British Petroleum (BP) projects in
the Azerbaijan sector of the Caspian Sea. The country
of Azerbaijan is located at the crossroads of Western
Asia and Eastern Europe with its borders meeting
Armenia, Georgia and the Caspian Sea.
"The Bos Shelf Company, which is wholly owned by SOCAR,
will act as a contractor," State Oil Company of Azerbaijan
(SOCAR) President Rovnag Abdullayev said. "Bos Shelf will
use the services and assets of the Heydar Aliyev Baku
Deep Water Jacket Plant," he added. "Major companies
such as McDermott and Saipem which previously acted as
contract companies will act as subcontractors of Bos